Changes to Insurance Law in January 2022
Last year, the government of Alberta made a few changes to the Insurance Act. One of these changes comes into effect on January 1, 2022. The change will allow for direct compensation for property damage claims, which includes coverage for your vehicle damage, any loss of use of the vehicle, as well as physical objects which are affected inside the vehicle. The new direct compensation law coming into effect has NO EFFECT ON PERSONAL OR COMPENSATION claims to any degree.
What are the changes?
Starting in January 2022, you will be able to collect the cost of your vehicle repair cost through your own insurance instead of through the at-fault party’s insurance. Currently, your insurance company must seek out and obtain payment for your vehicle damage and repair through the insurance company of the individual who was at fault or seek to allocate the cost of the damage between insurance companies, depending on who is at fault. Starting on January 1, 2022, you can obtain this compensation directly from your own insurance company.
The determination of who is at fault will not affect what your policy will pay out. In other words, if you were 60% at fault for a collision, then the direct compensation will cover that 60%. The other 40% is either not covered or covered through optional collision coverage if you have purchased it as extra coverage on your policy.
What if you were at fault in a collision?
Of course, if you are at fault in a collision, the new law does not change anything in terms of what your policy will cover. If you were at fault and do not have collision coverage, you will still be left paying out of pocket for your vehicle repair or loss.
How does this effect you and your premiums?
One of the main benefits for this new model is that it will be more efficient and easier for you to obtain what you are owed for property damage, as you will be dealing with your own insurance company. As a result, the process will be more streamlined and likely faster.
Depending on what kind of vehicle you are insuring, the cost of your premiums will vary. If the value of your vehicle is higher, then you will have to pay a higher premium. This calculation is different from the prior system which would require you to pay premiums based on the chances you had of hitting a luxury vehicle on the road. However, time will tell if in fact there will be any monetary discounts or benefits to the person purchasing the insurance coverage.